James Tobin

James Tobin

[toh-bin]
Tobin, James, 1918-2002, American economist, b. Champaign, Ill., Ph.D. Harvard, 1947. A professor at Yale Univ. from 1950 until his death, he was also an influential member (1961-62) of President Kennedy's Council of Economic Advisers. Tobin's work advanced the significant "portfolio theory," which holds that diversification of interests offers the best possibility of security for investors, and that investments should not always be based on highest rates of return. He also wrote on the process of information exchange between financial markets and "real" markets. Tobin was awarded the Nobel Memorial Prize in Economic Sciences in 1981.

James Tobin (March 5, 1918 March 11, 2002) was an American economist. Tobin advocated and developed the ideas of Keynesian economics. He believed that governments should intervene in the economy in order to stabilize output and avoid recessions. His academic work included pioneering contributions to the study of investment, monetary and fiscal policy and financial markets. Furthermore, he proposed an econometric model for censored endogenous variables, the well known "Tobit model".

Outside of academia, Tobin became widely known for his suggestion of a tax on foreign exchange transactions, now known as the "Tobin tax". This was designed to reduce speculation on currency markets, which he saw as unproductive. He also suggested that the proceeds of the tax could be used to fund projects for the benefit of Third World countries, or to support the United Nations.

Biography

Early life

James Tobin was born on March 5, 1918 in Champaign, Illinois. His parents were Louis Michael Tobin, a journalist working at the University of Illinois at Urbana-Champaign, and Margaret Edgerton Tobin, a social worker. Tobin followed primary school at the University Laboratory High School of Urbana, Illinois, a laboratory school in the university's campus.

In 1935, on his father's advice, Tobin took the entrance exams for Harvard University. Despite no special preparation for the exams, he passed and was admitted with a national scholarship from the university. During his studies he first read Keynes' General Theory of Employment, Interest and Money, published in 1936. Tobin graduated summa cum laude in 1939 with a thesis centered on a critical analysis of Keynes' mechanism for introducing equilibrium "involuntary" unemployment. His first published article, in 1941, was based on this senior's thesis.

Tobin immediately started graduate studies, also at Harvard, earning his M.A. degree in 1940. Here he had among his professors Joseph Schumpeter, Alvin Hansen, Gottfried Haberler, Sumner Slichter, Seymour Harris, Edward Mason, Edward Chamberlin, and Wassily Leontief, while the graduate students included Paul Samuelson, Lloyd Metzler, John Kenneth Galbraith, Abram Bergson, Richard Musgrave and Richard M. Goodwin. In 1941, he interrupted graduate studies to work for the Office of Price Administration and Civilian Supply and the War Production Board in Washington, D.C.. The next year, after the United States entered World War II, he enrolled in the US Navy, spending the war as an officer on a destroyer. At the end of the war he returned to Harvard and resumed studies, receiving his Ph.D. in 1947 with a thesis on the consumption function written under the supervision of Joseph Schumpeter. In 1947 Tobin was elected a Junior Fellow of Harvard's Society of Fellows, which allowed him the freedom and funding to spend the next three years studying and doing research.

Academic activity and consultancy

In 1950 Tobin moved to Yale University, where he remained for the rest of his career. He joined the Cowles Foundation, which moved to Yale in 1955, also serving as its president between 1955-1961 and 1964-1965. His main research interest was to provide microfoundations to Keynesian economics, with a special focus on monetary economics. In 1957 he was appointed Sterling Professor at Yale.

Besides teaching and research, Tobin was also strongly involved in the public life, writing on current economic issues and serving as an economic expert and policy consultant. During 1961-62, he served as a member of John F. Kennedy's Council of Economic Advisors, under the chairman Walter Heller, then acted as a consultant between 1962-68. Here, in close collaboration with Arthur Okun, Robert Solow and Kenneth Arrow, he helped design the Keynesian economic policy implemented by the Kennedy administration. Tobin also served for several terms as a member of the Board of Governors of Federal Reserve System Academic Consultants and as a consultant of the US Treasury Department.

Tobin was awarded the John Bates Clark Medal in 1955 and, in 1981, the Nobel Memorial Prize in Economics. He was a fellow of several professional associations, holding the position of president of the American Economic Association in 1971.

In 1972 Tobin, along with fellow Yale economics professor William Nordhaus, published Is Growth Obsolete, an article that introduced the Measure of Economic Welfare as the first model for economic sustainability assessment.

In 1988 Tobin formally retired from Yale, but continued to deliver some lectures as Professor Emeritus and continued to write. He died on March 11, 2002, in New Haven, Connecticut.

Tobin was a trustee of the Economists for Peace and Security.

Personal life

James Tobin married on September 14, 1946 with Elizabeth Fay Ringo, a former M.I.T. student of Paul Samuelson. They had four children: Margaret Ringo (born in 1948), Louis Michael (born in 1951), Hugh Ringo (born in 1953) and Roger Gill (born in 1956).

Publications

  • Tobin, James (1941). "A note on the money wage problem". Quarterly Journal of Economics 55 508–516.
  • Tobin, James (1955). "A Dynamic Aggregative Model". Journal of Political Economy 63.2 103–15.
  • Tobin, James (1958). "Liquidity Preference as Behavior Towards Risk". Review of Economic Studies 25.1 65–86.
  • Tobin, James (1969). "A General Equilibrium Approach to Monetary Theory". Journal of Money, Credit, and Banking 1.1 15–29.
  • Tobin, James and William C. Brainard (1977). "Asset Markets and the Cost of Capital". In Richard Nelson and Bela Balassa, eds., Economic Progress: Private Values and Public Policy (Essays in Honor of William Fellner), Amsterdam: North-Holland, 235-62.

See also

References

External links

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